1 Texas Emissions Reduction Plan (TERP) Texas Commission on Environmental Quality August 4, 2004 TERP Advisory Board Meeting

2 Overview  TERP was created in 2001 by SB 5 (77th Texas Legislature)  Focus is on voluntary incentives for projects to reduce emissions of nitrogen oxides (NOx) in the nonattainment and near-nonattainment areas of Texas.  The program was amended in 2003 by HB 1365 (78 th Texas Legislature) Added Small Business Grant Program Increased types of eligible sources and projects Provided for new revenues

3 TERP Programs  Chapter 386 Emissions Reduction Incentive Grant Program (TCEQ) Small Business Grants Program (TCEQ) Heavy-Duty Motor Vehicle Purchase or Lease Incentive Program (TCEQ) Light-Duty Motor Vehicle Purchase or Lease Incentive Program (TCEQ and Comptroller) Energy Efficiency Grant Program (PUC)  Chapter 387 New Technology Research and Development Program (TCEQ)  Chapter 388 Texas Building Energy Performance Standards (Lab) Energy Efficiency Programs in Certain Political Subdivisions (SECO)

4 Legislative Report Contents  Summary of projects funded with TERP funds  Accounting of the use of funds  Status of Plan in achieving emission reductions credited in air quality plans  Summary of administrative processes  Program adjustments made since last report and necessary legislative recommendations necessary to improve the Plan

5 Funding (FY02 – June 30, 2004)  Surcharge on off road equipment - $34.7 million  Surcharge on heavy-duty on-road vehicles - $16.1 million  10% fee on commercial motor vehicle registrations - $22.5 million  $225 fee for inspection of out-of-state vehicles - $0  Portion of vehicle title fees - $87.7 million  $10 fee on commercial vehicle inspections - $10.1 million  Fund balance interest - $1.8 million

6 Emissions Reduction Incentive and Small Business Projects Funded to Date (Sept. 1, June 30, 2004 ) Area$ AwardedProjected NOx reductions (tons) Projected NOx reductions (Tons/Day) Average Cost per ton/NOx Total$41,819,6957, $5,736 AUS$514, $12,495 BPA$400, $3,326 CC$15, $4,672 DFW$10,753,8642, $3,186 ELP$1,475, $5,632 HGA$23,544,5893, $7,261 SAT$5,116, $5,632

7 Small Business Projects Only (as of June 30, 2004) Area$ AwardedProjected NOx reductions (tons) Projected NOx Reduction s (tons/day) Average Cost per ton/NOx DFW$104, $12,345 SAT$38, $12,820

8 FY04 2 nd Round Selected Projects (as of July 26, 2004) Area No. of ProjectsGrant AmountProjected NOx Reductions (tons) Projected NOx reductions (Tons/day) Average Cost per ton/NOx Total203$80,894,36713, $5,960 AUS43$6,069, $6,961 BPA7$2,181, $5,116 CC4$1,907, $6,929 DFW93$29,693, $5,337 ELP2$457, $4,012 HGA43$36,408, $6,398 SAT5$2,547, $6,557 TYL2$799, $6,513 VIC4$828, $6,910

9 FY05 Program  Staff working on allocation approaches for Commissioners’ Work Session on August 16 th  Eligibility criteria for Emissions Reduction Incentive Grant Program - $7,000/ton; for Small Business Grants Program - $8,500  Funding cap for infrastructure projects at 50%  Ensure minimal risk to state funds when funding start-up businesses  Continue funding lease projects  Continue to work with public entities on 3 rd party grants; no private entities for FY05

10 Estimated Future Revenue for Emissions Reduction Incentive and Small Business Grants Programs  FY $127.4 million  FY $129.8 million  FY $132.8 million  FY $135.2 million

11 New Technology Research and Development Estimated Future Revenue  FY $13.8 million  FY $14.2 million  FY $14.5 million  FY $14.7 million

12 What is the NTRD?  The Texas Council on Environmental Technology (TCET) was created in 2001 by SB 5 to implement NTRD  Assist in developing solutions to air water waste problems  Funded 15 projects totaling $2.4 million  NTRD Program was formally transferred to TCEQ in 2003, by HB 37

13 New Technology Research & Development Program  Retrofit/add-on technologies targeted by the TERP  Advanced technologies for new engines  Studies and modeling  Advanced technologies that promote building and appliance energy performance  Advanced technologies that reduce emissions from other significant sources.

14 Fiscal Year 2004  Primary objective to fund : Emissions-reducing technologies May be eligible for funding under Chapter 386 (TERP)  74 applications - requesting approximately $60 million in funding  17 projects selected for $8.3 million

15 NTRD Funding for Fiscal Year 2004

16 NTRD Funded Projects for Fiscal Year 2004 $ AwardedNumber of Projects Total$8.3 Million17 Retrofit/add-on technologies targeted by the TERP $ 4,347,3697 Advanced technologies for new engines $ 1,633,6282 Studies and modeling $ 687,4392 Advanced technologies that promote building and appliance energy performance $00 Advanced technologies that reduce emissions from other significant sources. $1,385,6353 *Qualifying fuel projects $ 295,3223 *TERP Related

17 Fiscal Year 2005 Applications  Primary objective to fund : Emissions-reducing technologies May be eligible for funding under Chapter 386 (TERP)  104 applications - requesting approximately $73.6 million in funding  Currently in the review process